By Carla Mozee

A slide in prices of natural resources pressured commodity-related equities across Latin America on Monday, sending benchmarks in Brazil and Mexico lower after last week's losses.

But Brazilian stocks pared losses in the late stage of the session after Moody's Investors Service said it may boost Brazil's ratings to investment grade.

In Sao Paulo, the Bovespa fell 0.6% to 50,622.47, with a sag in shares in the commodity-rich market. The index fell 1.1% in the week end July 3.

The metals group, which makes up nearly 30% of the Bovespa index, fell 1%. Stock in Vale (RIO), the world's largest supplier of iron ore, fell 1.8%. Steel producer Companhia Siderurgica National (SID) fell 1.3%, and Gerdau (GGB) dropped 1.7%.

Shares of heavyweight state-run oil firm Petroleo Brasileiro (PBR) dropped 2.2%, as crude-oil prices fell 4% to $64.05 a barrel.

Oil prices slumped as worries about the pace of economic recovery were heightened by remarks by U.S. Vice President Joe Biden that administration officials "misread how bad the economy was" when the stimulus package was being crafted earlier this year.

The "recent feeling with [oil] investors is that demand is simply not there," said Bruce Zaro, chief technical analyst at Delta Global Advisors. "The market had assumed that the demand, with the economy, would pick up for all petroleum products. The market got ahead of itself."

Before the end of the trading session, Moody's said it will review its Ba1 foreign- and local-currency government bond ratings on Brazil for possible upgrade, stemming from the economy's "demonstrated resilience to shocks over the past year," a key characteristic needed for an investment-grade rating.

The current rating stands one notch below investment grade. The country already has investment-grade status from Fitch Ratings and Standard & Poor's.

The agency said although the country's gross domestic product is expected to shrink this year, and its fiscal accounts are expected to deteriorate compared with previous years, Brazil's overall performance has "exceeded initial expectations" relative to a number of other countries that carry similar or higher sovereign ratings.

Mexico's IPC index declined 1.3% to 23,742, with shares of copper miner Grupo Mexico down 2.9% as copper prices fell nearly 3%, and metals miner Industrias Penoles lost 2.6%.

The Reuters/Jefferies CRB Index (CRB), a gauge of commodity prices, fell 2.3%.

Mexican stocks were also lower after President Felipe Calderon's ruling party lost majority control of the lower house of Congress in Sunday's elections, raising the prospect that his party will have a harder time passing its reform proposals.

The IPC fell 1.7% last week.

Argentina's Merval slumped 1.4% on Monday, but was off session lows. Locally traded shares of Petroleo Brasileiro fell 4.2% and shares of steel tube maker Tenaris (TS) fell 3.1%. The Merval rose 1.1% last week.

Chile's IPSA slipped 0.2% to 3,109.

Earlier Monday, Chile's central bank said its Imacec economic-activity gauge shrank 4.4% in May. Analysts surveyed by Dow Jones Newswires had expected a decline of 4.5%.

The Imacec survey, which tracks 90% of Chile's gross domestic product, fell 4.6% in the April.